John Regan of Parcxmart (Debit Card) responds to Neil Podmore at Verrus (Pay by Cell) If you want to see what brought all this about go here and read up. John is head of a company that supplies a debit card system where parkers can acquire a card and place money on it at local merchants and use the card not only for parking payments, but also at shops in the area. Neil directs Verrus, a Pay by Cell Phone system based in Vancouver, BC,
Sorry
it took so long to respond Neil. I am out selling city customers, I do
not live in New Haven, and I dont think anyone who does thinks of their
summer as "dog days".Regarding value, I dont see any value under your present business
model for consumers to use their cell phone when paying for parking
on-street unless they are in a jam and without cards or cash or coins.
Perhaps in London everyone loves paying extra? Since you are very
clever let me show the readers what the press says about how you must
pay for the use of your cell phone as follows and the whole article is
linked for everyone to read:“Once signed up with a free pay by phone account, users simply call
the toll-free number from the registered phone and key in the location
number (posted on the meter or on nearby signs) and the amount of
parking time desired. The appropriate total, plus a 35-cent service
charge (including the text message reminder cost), will be charged to
the credit card”http://www.paymentsnews.com/2008/05/pay-by-mobile-p.html
That doesnt sound very "optional. So am I to believe that if I dont
want to get your message(which no one needs anyway)I get the payment
service for free? Plus it is free for the city? I think someone is
paying somewhere in this value chain?I believe in choice too and as a consumer if I had to choose between
cell minutes plus fees, and cards which are at no cost to me I would be
happy to choose cards everytime. I would also remind you that ten
million transactions after so many years worldwide is quite small.
Putting that in perspective, in one city Parcxmart will do more than
650K transactions in 2008 versus your ten million in the entire globe.
I guess consumers still like cards even smart cards.Regarding costs of smartcards when cities buy new meters the cost to
include a smart card is marginal. And of course the consumer doesnt
have to pay per transaction – which is truly valuable and convenient to
the end user who by the way is paying the city and everyone else in
this business.You also avoided the issue of privacy and identity theft based upon
all the information you store on consumers for payment at parking
meters – including license numbers. Perhaps that should be disclosed
during enrollment? I had to dig down into NA Terms on the bottom of the
page of your website; I think everyone should read this section it is
quite remarkable what a cell phone payment services provider can do
with your name, address, phone, cc/debit card, and card information. Do
you sell the names?In closing, your fees and business modelactually takes revenues away
from cities while smartcards/debit/credit cards provide incremental
revenues back to cities. This is well documented and most consider the
incremental gross revenue lift at about 30-35 percent on cards. In one
city we went from $.72 to $1.46 per transaction. Now that is value!Therefore, the fees the city pays to deploy a smart card are
essentially free, the merchants enjoy accepting less expensive smart
card processing costs by a factor of 30% – mayors love that, and the
parking public goes into their stores which is good for local economic
development. Other software features are also available such as loyalty
programs, the power of local currency, instant couponing, and
transportation services. Finally, cities are able to brand their vision
on each card issued.London
sounds like the way to go Neil. I recommend changing your business
model ASAP. So you then admit your business model should not charge the
consumer a transaction fee – which is the way it ought to be
everywhere. I agree. Thanks for your objectivity.This is why I agree. Your surcharge is essentially a tax on top of a
parking tax which is voluntary of course(we dont have to park) but this
is truly bordering on double taxation without representation. We dont
like that in this country:) For example, do the city councils know that
you can pay your firm on a $1 parking transaction an additional $.35?
Wow imagine bringing that one up with the mayor at the local merchant
association meeting?I would also appreciate it if you would answer my questions
regarding privacy issues, surcharging against Visa/MC rules, and your
right to sell or pass on my personal information to any third party?FYI, I also heard the city must purchase all new handhelds, and
figure out how to educate their staff on making sure they dont ticket
the cars that did pay. I heard this is an issue? Do you want to respond
to that too? Also what happens when the enforcement server goes down
and the enforcement officers lose connectivity with all their new
handhelds?We could go on for quite awhile I am sure. I guess we wont be having
any partner synergy meetings in the near future though? It is a shame
because I will admit Vancouver is one of the most stunning of cities in
all of North America. Have a good week.John Regan
That’s it for now
JVH
4 Responses
I have one last comment about all of this and based upon the economic efficiencies of payment platforms whether they are run by Visa or Parcxmart or Cell Phone SPs…….Payment platforms are supposed to bring value to all the constituents in the value chain. Parcxmart launched its city card service in 2006 as the most cost-efficient payment processor of small dollar transactions in North America. And we still are……let me explain:
1. Yes we charge ten percent fixed across the board for $1 transactions only; the rest of our model is based upon city volumes in their parking operation and their average tickets, or a sliding scale. Garages are dealt with separately at ten cents per transaction plus 1.75% since the average tickets there tend to be north of $5.
2. On a one dollar transaction our transaction processing fee is $.10 cents; Visa/MC on average is $.17/18 cents; and cell phone payments are $.35 cents per transaction from what I have read recently.
Therefore, Parcxmart is the least expensive processor of these small transactions; Visa/MC is second at 75-80% more expensive than Parcxmart; and cell phones run third at 250% more costly than Parcxmart at $.35 cents per transaction on a $1 ticket, and 100% more costly than Visa/MC. Please remember a transaction fee is a transaction fee no matter who pays for it.
New payment platforms are typically designed to bring new processing efficiencies to the market. Parcxmart has done that. And Parcxmart will remain the most cost-efficient payment processing option for small dollar transactions in the marketplace for cities and its participating merchants against any and all competition.
As the CEO of this company I stand behind that statement. My firm will out perform any other payment provider on a per transaction processing unit as it already does today and will continue to do so i the future.
There is of course No Free Lunch. Beware of companies which sell FREE for they are typically manipulating their value proposition, versus providing true value. I truly dont believe and this is my personal opinion that cities should be allowing surcharging on parking transactions. If the value offered by the payment option cant be rationalized by the government based upon their standards, why should the local citizen pick up yet another tax and in this case a regresssive tax. It would make more sense to raise rates and follow the Schoup economic principals, and then if you wanted cell phones, have them compete on an equal playing field just like Parcxmart, Visa/MC, and all the verey professional pay and display OEMs do today.
John Regan
CEO
Parcxmart Technologies Inc.
Jregan@parcxmart.com
Thanks for your interaction.
I’m really enjoying the battle that is being waged in this blog. It’s hard to argue against what John from Parcxmart is saying.
As a frequent parker, I can guarantee you that I would never even entertain the thought of paying by cell phone. Parking is expensive enough as it is, why pay more using a cell phone? For the convenience? I only have a limited amount of minutes to use per month, and certainly wouldn’t waste them on my parking. And to then get a text message, for which I’ll be paying… (I think I pay $0.15 for text messages. I have to check.)
The only way I would consider paying anything extra for my parking is if there is a real time saving, and something very convenient. The parking debit card is a good idea, but having it reloaded sounds like a chore. But it is definitely more sensible than cell phone parking.
Bill:
Regarding loading: Then you can just go to the local website for example http://www.newhavencard.net and get a new card with up to $500 of value on it. That should circumvent your need to reload in a merchant shop if you dont go in any particular one on a daily basis.
Thanks for your comments, John
As a parking consumer it is absolutely no brainer….Why would I want to have $20/$30 or even $40 (I HAVE TO PREPAY!!!) tied onto another card that I can loose when it gets me absolutely no benefit? If I have a Credit Card, why do I need another card in my wallet? At least with the Cell Payment I get convenience. I am sitting in a restaurant, eating my cheesecake when I note that my parking is expiring….This is where I make my decision….is the extra 35 cents worth me not having to leave the table. Most of the time it is (unless it is a really bad cheesecake). As far as the city is concerned, it just sees a Credit Card transaction for the FULL parking rate….whether or not Verrus charged me money is irrelevant to the city. In Miami it totally makes sense…. I am on the beach, relaxing, get a message, and add more time on my cell phone. Done! Oh, there you are – hoofing it to the meter to use your card….bring back some more sunscreen!